AUD/USD: 0.9630EUR/USD: 1.3665The dollar moved sharply lower today as the markets perceived that despite the US Government passing the bill to lift the debt ceiling, the economic impact of the recent shutdown would keep the Fed from scaling back its stimulus program and that tapering will not now begin until 2014, with President Obama today acknowledging the damage that has been done to the economy. None of this seemed to do too much damage to the equities markets, with the S+P reaching an all time high.
The possibility of another debt crisis also came into focus, as the temporary solution to the budget issues does not resolve the longer term problems dividing Republicans and Democrats and as we move forwards, is likely to keep the dollar under pressure.
Meanwhile, today's data showed that the jobless benefits last week declined by 15K to 358K after being revised down to 373K in the preceding week.
Today's move, when it happened was very sharp and came about at the same time as the Chinese ratings agency, Dagong downgraded US from A to A- . Whether that triggered the move or not, I am not quite sure, but it certainly did the trick and now the Euro is looking as though it will make an attempt on the medium term target at 1.3710 (1 Feb high).
Beyond there would see further sellers at 1.3760 and 1.3810 (61.8% of 1.4939/1.2041) but closer to home 1.3710, should be pretty strong and I doubt will be broken today.
On the downside, 1.3645 will now be the first support, followed by 1.3600 and then 1.3540 .
The 4 hour momentum indicators are pointing higher although the dailies are still fairly neutral and thus I would not have too much of a bias either way. The price action is either doing nothing at all, or spiking around and being a Friday is a good day not to be too involved. There is little to no data of interest - except from China - and the market may just head for an early exit. Have a good weekend!
